Chinese immigrant who made fortune in fakes finds haven

In this Thursday, June 18, 2015 photo, a man walks outside a building in Beijing where an apartment is listed in Chinese official documents as being registered to Xu Ting, her younger brother Xu Lei, and their mother Zhao Peiyuan. Xu Ting, a Chinese immigrant living in the U.S has been sued for counterfeiting by eight different luxury brands, including Gucci and Louis Vuitton, and still owes Chanel Inc. $6.9 million in damages for counterfeiting, according to U.S. court documents. None of this has stopped her from becoming a lawful permanent resident of the United States and amassing the trappings of a solid middle class life. (AP Photo/Mark Schiefelbein)

SHANGHAI — The Chinese woman has a history of selling counterfeit luxury goods.

She has been sued in the United States by eight luxury brands. She owes Chanel $6.9 million for selling products online under its name.

None of it has stopped Xu Ting, a 45-year-old immigrant, from achieving a comfortable suburban life in San Diego with her husband and their 3-year-old son. Last year, she became a legal resident.

China is not the only country with a counterfeiting problem. Most fakes are made in China, but they are sold in America, where counterfeiting is rarely prosecuted as a crime. Lack of cooperation with China makes it easy for counterfeiters to move their money beyond reach — and hard to root out counterfeiting kingpins. As long as counterfeiters can stay out of jail and hold on to their profits — and consumers continue to buy — the trade in fakes will thrive.

“There's a million ways to game the system,” said Dan Plane, an intellectual property lawyer in Hong Kong. “Probably the only thing that's going to stop her is when she passes away — probably on an island resort somewhere — or if she gets arrested.”

So far, Xu Ting has refused to show up in court. She has worked toward a graduate degree at San Diego State University, helped her family accumulate at least $890,000 in bank accounts in China, and bought a $585,000 house with her husband, public records and court cases show.

“The essential point for Chanel is really shutting down the counterfeiting operations, which we did successfully,” Chanel spokeswoman Kathrin Schurrer wrote in an email. Schurrer added that the legal process is ongoing and declined to comment, but noted that “California has a law prohibiting the civil seizure of a home if it is a primary residence.”

In 2010, Gucci and brands in France's Kering group filed a lawsuit in New York federal court against Xu Ting, her future husband, and eight others who allegedly sold more than $2 million worth of fake handbags and wallets online to American customers.

“The people they are arresting or suing here in the United States are low-level people,” Siegle said. “If you can find where the money is going, you can get to the heart of the problem.”

But Gucci could not find where the money went once it landed in China because Chinese banks refused to disclose account details.

“BOC cannot comply with such orders without violating Chinese law,” the Bank of China wrote in an email.

The case is ongoing. Kering spokeswoman Charlotte Judet said Gucci would “vigorously enforce any judgment” it obtained.

Xu Ting declined multiple requests for comment.

A slight man in wire-rimmed glasses answered the door in San Diego's Rancho Penasquitos area and identified himself as Xu Lijun but declined to comment.

“After your colleague's visit, we communicated, and she still did not want to do the interview,” said the family's lawyer in Beijing, Chen Peng.

Getting a green card

In February 2014, Xu Ting got a green card, thanks to her husband's advanced degree or “extraordinary ability,” according to a person familiar with the matter who spoke anonymously because immigration records are not public. Immigration authorities have the Rancho Penasquitos address on record as her residence, the person said.

Dan Kowalski, an immigration attorney and editor of Bender's Immigration Bulletin, said immigration officials may not have known about Xu Ting's legal problems but more likely did not consider them a disqualification. Grounds for denying a green card range from committing a serious crime to having a communicable disease, but there's nothing about civil liabilities. A vague requirement of “good moral character” is more commonly applied for citizenship, not legal residence.

In the United States, most counterfeiting prosecutions are civil cases brought by companies. Lawyers say criminal cases, which carry the possibility of jail time, are a more effective deterrent.

“A person is more likely to be struck by lightning than imprisoned for counterfeiting,” said Geoffrey Potter, an intellectual property lawyer at New York's Patterson Belknap Webb & Tyler.

Justice Department spokesman Peter Carr said the government has done “a number of significant prosecutions.”

China is the largest source country for counterfeit goods seized in the United States, and apparel and accessories are the largest category of merchandise. Luxury goods are typically made in Guangzhou and sent by container or courier such as FedEx to the United States. They may be sold in stores or flea markets but are usually hawked online.

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